Warren Buffet is known as the Oracle of Omaha.
That’s because he’s one of the most savvy investors of all time. He runs Berkshire Hathaway, a U.S. multinational conglomerate holding company. Earlier this month the price of his company's shares hit $200,000 apiece for the first time.
You may remember him hanging out with President Obama, too. At that time, Buffet was bemoaning the fact that his secretary paid taxes at a higher rate than he does.
You may also remember him being the driving force behind something called the “Buffett Rule,” which was designed to hike the tax rates of the richest among us.
The Buffett Rule became part of a tax plan proposed by President Barack Obama in 2011. It would apply a minimum tax rate of 30 percent on individuals making more than a million dollars a year.
Cool.
I also remember back then writing a column under the headline, Buffett Rule Is Bogus. “It is one of the most ridiculously disingenuous proposals I have ever heard,” I wrote back then.
See, back then the White House said the new tax rate would affect three-tenths of 1 percent of all taxpayers. Most experts agreed that was probably more like one-tenth of 1 percent.
That’s because most millionaires already pay taxes at an effective rate higher than 30 percent. People like CEOs of big companies, sports stars, movie stars and most other millionaires make their money by collecting a paycheck.
It’s just the tiny minority of millionaires who make more than a million dollars a year in capital gains who would be affected. That’s because the capital gains tax rate is only 15 percent and for a good reason. Capital gains are made from investments. The money used to make the investment already has been taxed once as income. So when you use money to make money, it’s taxed at the lower rate.
Plus, taxing capital gains at a lower rate encourages people to invest, which is a good thing.
And investing, by the way, has been a very good thing for Buffett.
So good, in fact, that Buffett pals around with President Obama and says rich people should pay more taxes. Fair enough. That’s a nice thing for him to say.
Now, let’s see what he does.
When I say investing has been good for Buffet, it is a massive understatement. Investing has been so good, his Berkshire Hathaway has roughly $55.5 billion in cash lying around.
So Berkshire recently committed $3 billion of preferred equity financing to help Burger King buy out the Canadian fast-food chain Tim Hortons Inc. For its trouble Berkshire gets a 9 percent annual dividend which would be, of course, taxable income. But any investment guy will tell you it’s pretty sweet to get an annual 9 percent dividend these days. Then again, one would expect nothing less from a guy like Buffett, would one?
But this is where it gets a little sticky.
The deal sets up Burger King for what is known as a “tax inversion” or “corporate inversion.” That’s when a corporation relocates its headquarters to a lower-tax nation while keeping most of its operations in its higher-taxed country of origin.
This week, when the deal was announced, company officials scrambled to tamp down the notion that Burger King was moving to Canada to lower its tax bills.
The deal wasn’t about lower taxes. It was about global reach, creating the world’s third-largest fast food chain and lots of other strong business reasons.
Yeah, but let’s be honest. It was about taxes, too, now wasn’t it?
Funny thing about all this is that tax inversions have recently become a public policy issue, likely because some 25 major companies have participated in tax inversions since President Obama took office
The president has issued statements slamming tax  inversions, calling them “unpatriotic.” He has said they are “totally wrong,” and has called for Congress to “embrace economic patriotism that says ‘let’s rise or fall together,’ as one nation, and as one people.” Obama also called on corporations to engage in “economic patriotism.”
And lots of people – including me and many Democrats – apparently agree with that notion.
The Twitterverse was deluged with “I’ve eaten my last Whopper” tweets.
Ohio Democrat Sen. Sherrod Brown released a statement urging a boycott.
"Burger King’s decision to abandon the United States means consumers should turn to Wendy's Old Fashioned Hamburgers or White Castle sliders," Brown said. "Burger King has always said 'Have it Your Way'; well my way is to support two Ohio companies that haven’t abandoned their country or customers." Wendy's is based in Dublin, Ohio, while White Castle is headquartered in Columbus.
Of course, “unpatriotic” as the Burger King deal may be, so far the president and his men have been pretty mum about it.
Just like they’ve been mum about the tax inversions engineered by several of the president’s big political donors.
No surprise there, eh?
Ah, the irony.
Buffett – with the president at his side – calls for rich people to pay more taxes, then uses $3 billion of his favorite American dollars to help Burger King do precisely the opposite.
Will President Obama come forth and declare Buffett’s and Burger King’s move unpatriotic?
Not bloody likely.
Proving once again that in Washington, it’s really not about good policy. It’s about good politics – and good business.